momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.It brings together, managers from the agricultural world and important people from external perspectives, such as health, development, strategy and defense. Its objective is to promote regulationof agricultural markets by creating new evaluation tools, such as economic models and indicators,and by drawing up proposals for an agricultural and international food policy.

Strong comeback of Argentina on global agricultural markets?

January 18, 2016

The November 22, 2015 presidential elections in Argentina brought about the arrival to power of a new president––Mauricio Macri––and a new center-right government on December 10. This is a turning point in a changing economic environment and a complicated political legacy.

Following years of protectionist measures inflicted by the Kirchner couple, the government’s new doctrine is based on free trade and openness to the outside world, a policy that will be especially applied to the country’s agriculture. Convinced that “Argentina cannot succeed without the agricultural community,” the new administration eliminated taxes on grain and meat exports, and cut by 35 to 30 percent the levies on soybean sales. The country ranks third in world soybean production and exports, and Macri is hoping to encourage farmers to release existing reserves, and thus restart export programs.

FranceAgrimer indicates that, combined with a likely devaluation of the peso, these measures are signaling an improved competitiveness of Argentina’s agricultural exports with a possible supply-side shock, at a time when prices are already declining due to abundant global crops. Shortly following Argentina’s announcement, European grain prices indeed dropped, as analysts feared a glut caused by a massive arrival of Argentine agricultural commodities in global markets.

As it happens, this turmoil in European grain prices is a new example of changing markets, which have become markets influenced by expectations and psychological behaviors. We are no longer dealing with quantity against quantity, supply against demand, but with anticipated supply against anticipated demand. Yet, anticipations by both sides are not precise, and the result is that, far from stabilizing markets, investors’ behaviors are instead increasing volatility.

In the end, newly elected President Macri’s major task will be finding the adequate seesaw movement by not giving in to the appeal of unregulated free trade or reverting to protectionism. Because agriculture is a major strategic asset that should be preserved, notably through better export and import regulation to protect the nation’s population and resources.